Avoid Common Filing Mistakes for Business and Withholding Income Tax
Filing electronically is the best way to avoid common, and sometimes costly, mistakes. IL-1120, IL-1120-ST, and IL-1065 filers can file electronically using approved Tax-Prep software or through a preparer. IL-990-T and IL-1041 filers can file free using MyTax Illinois. Once you submit your return electronically, do not mail a copy. Use the following information to assist you in avoiding processing delays.
General information for avoiding common mistakes
- Follow the instructions for the return you are filing to ensure you have correctly completed all required lines on your return.
- Use a calculator. Review the entries you made on each line for accuracy and verify your calculations.
- Use only IDOR-issued or approved forms and schedules. Spreadsheets or other printouts are not acceptable.
For Illinois Withholding Income Tax filers
- File and pay based on the frequency that the Department has assigned you. Doing otherwise may lead to penalties for unfiled returns or late payments.
- Make sure to include the correct sequence number with your FEIN. For most taxpayers, it is 000, but some taxpayers may use multiple sequence numbers when they have multiple withholding accounts on the same FEIN. Not including them or using the incorrect sequence number can lead to misapplied payments and returns.
Apportioning business income and allocating other income has specific formulas
- When apportioning business income, follow the instructions for your form closely when determining the amounts to include in the numerator and denominator.
- Income, other than business income, is allocated using specific lines of each return. Please refer to the specific instructions for your return regarding the allocation of non-business income and non-unitary partnership income.
- If you do not complete all required apportionment information on your return, we may issue a notice and demand proposing 100 percent of income as being allocated to Illinois, or in the case of a loss return, a notice indicating none of your loss as being allocated to Illinois. Please review the specific instructions for your return.
- For unitary filers filing Schedule UB, be sure to
- round each member’s apportionment figure to the 6th decimal on Schedule UB,
- add all members’ apportionment percentages together to get combined apportionment totals, and
- carry over the members’ combined apportionment from Schedule UB to your base return.
Attach all necessary supporting schedules or forms to your return
- If you are filing Schedule J for foreign dividends, you must complete and attach U.S. 1120, Schedule C or equivalent schedule (this includes unitary filers).
- If you are carrying forward (or back) an Illinois net loss deduction, you must complete Schedule NLD (Schedule UB/NLD for unitary filers) in its entirety and attach it to your return. If any portion of a loss claimed on Schedule NLD is originating from another company, you must complete Step 2 of Schedule NLD to include the FEIN and reason (such as a merger).
- If you are annualizing your income, you must complete and attach Form IL-2220.
File according to how you file with the IRS
- You must file the Illinois form type that matches how you are required to file with the IRS (for example, if you file form U.S. 1120 with the IRS, you must file IL-1120 with IDOR).
Claim payments and carry forward amounts correctly
- Take into account any adjustments the Department has informed you of on a Return Correction Notice or other correspondence.
- If you have a credit carryforward from a previous year, or have made estimated payments or an extension payment, make sure you have correctly applied and claimed the monies on your return for the appropriate tax year.
- Payment vouchers are specific to the type of payment being made and the tax period being paid. Make sure the payment voucher you are using matches the type of payment and the tax period you wish to pay.
For unitary filers
- All members of your unitary group must be listed on Schedule UB. Use as many schedules as necessary to provide your complete listing. You may not attach spreadsheets or other documentation listing your members. If you use forms not authorized by the Department, processing delays will occur.
- Use the Schedule UB instructions to ensure amounts are properly carried to the correct lines on Form IL-1120.
- Each member listed in Section A of the Schedule UB must have its own FEIN – make sure there are no duplicates.
- With the exception of holding companies, each member listed in Section A of the Schedule UB can only be a part of one unitary group with the same year ending. Please review the Schedule UB instructions.
- Only valid FEINs are acceptable on Schedule UB.
- Eliminations should only be reported in the manner provided for on the Schedule UB and as detailed in the Schedule UB instructions.
- Make sure you include any applicable merger information on Schedule UB.
- Provide the apportionment for each member even if the unitary group totals 100%.
If you need to correct or change your original return after it has been filed, be sure to use the corresponding amended return not another original return. (For example, if you submitted your original IL-1120 and need to correct or change the amounts reported, use Form IL-1120-X).